"Higher ethanol production definitely and directly raises the price of corn," said USDA economist Ephraim Leibtag. In the short run, what is TRUE if the production of ethanol increases?

Question

Quizplus · Accepted Answer

When ethanol production increases, the demand for corn also increases as corn is one of the primary sources of ethanol production. This leads to an increase in the price of corn in the short run. There is no reason for the supply of ethanol to decrease or the supply of corn to increase, and there is no evidence to suggest an immediate increase in demand for ethanol.

"Higher Ethanol Production Definitely and Directly Raises the Price of Corn